Breaking Down Hagerty, Inc. (HGTY) Financial Health: Key Insights for Investors

You're looking at Hagerty, Inc. (HGTY) and trying to figure out if the enthusiast brand can keep its foot on the gas, especially with the 2025 fiscal year wrapping up. Honestly, the numbers suggest a strong trajectory, but you need to see where the profit is actually coming from. Management has already raised its full-year 2025 outlook, now projecting total revenue between $1.37 billion and $1.38 billion, and forecasting net income to surge to $124 million to $129 million, which is a massive 58% to 65% growth over the prior year. This isn't just top-line growth; the company's specialty focus is paying off, evidenced by a year-to-date loss ratio of just 42.1%, which is defintely better than the broader property and casualty (P&C) market. Plus, the core community is solid, with Hagerty Drivers Club membership hitting approximately 921,000 paid members as of Q3 2025, so the recurring revenue stream is healthy. We need to break down how the State Farm partnership and the $20 million in technology investments will map to future margin expansion, but right now, the financial health looks robust.

Revenue Analysis

You're looking for a clear picture of how Hagerty, Inc. (HGTY) actually makes its money, not just the headline numbers, and the story for 2025 is one of strong, but uneven, growth across its core enthusiast ecosystem.

The direct takeaway is that while the specialty insurance business-driven by Written Premium-remains the backbone, the high-growth Marketplace segment is rapidly changing the revenue mix. Hagerty, Inc. is projecting a full-year 2025 Total Revenue growth rate of 14-15%, which is a solid acceleration for a company of this size, with year-to-date (YTD) Q3 2025 revenue already reaching $1,068.3 million.

Primary Revenue Sources and Growth Drivers

Hagerty, Inc.'s revenue is essentially split into two major categories: the stable, large-volume Insurance segment and the high-growth, transactional Marketplace and Membership segments. The company's core strength is its Managing General Agent (MGA) model, where it earns Commission and Fee Revenue from placing specialty vehicle insurance policies.

Here is the breakdown of the key revenue components and their year-over-year (YoY) growth through the first nine months of 2025 (YTD Q3):

• Written Premium: This is the best indicator of the health of the core insurance business, which grew 13% YoY to $934.4 million.
• Commission and Fee Revenue: The direct revenue from the insurance business increased 14% YoY to $380.7 million.
• Marketplace Revenue: This segment, which includes the Broad Arrow Group's auctions, surged by an exceptional 135% YoY to $89.9 million.
• Membership Revenue: Revenue from the Hagerty Drivers Club (HDC) grew 11% YoY to $47.0 million.

The insurance operation provides the stable, recurring revenue stream, but the Marketplace is defintely the growth engine right now. You can see the clear difference in growth rates-14% for Commission versus 135% for Marketplace-which shows where the strategic investments are paying off.

Shifting Segment Contribution

While the Marketplace's growth is phenomenal, the Insurance business still dominates the overall revenue contribution. The Commission and Fee Revenue of $380.7 million YTD Q3 2025 represents approximately 35.6% of the total YTD revenue, making it the single largest direct revenue stream. The Marketplace and Membership segments combined account for a smaller, but rapidly expanding, portion of the total.

The significant change you need to track is the explosive growth in Marketplace revenue, primarily driven by a higher level of inventory sales and the successful launch of European auctions.

Here's the quick math on the most significant revenue segments for the first nine months of 2025:

The company is also strategically expanding its insurance offerings, targeting the modern enthusiast vehicle segment and signing a new partnership with Liberty Mutual, which should help sustain the Written Premium growth of 13-14% anticipated for the full year. This focus on expanding their specialty insurance products, while simultaneously scaling up the high-margin auction business, is the core of their 2025 strategy. To be fair, the strong policy retention rate of 88.6% is what gives the entire revenue base its stability.

For a deeper dive into who is fueling this growth, you should read Exploring Hagerty, Inc. (HGTY) Investor Profile: Who's Buying and Why?

Next step: Analyze the profitability of these different streams to see if the high-growth Marketplace is truly margin-accretive.

Profitability Metrics

You're looking for a clear signal on whether Hagerty, Inc. (HGTY) is turning its strong revenue growth into real profit, and the 2025 numbers defintely show a powerful trend of margin expansion. The short answer is yes, profitability is accelerating faster than expected.

For the first nine months of 2025, Hagerty, Inc. reported year-to-date (YTD) net income of $120.7 million on a total revenue of $1.0683 billion. This translates to a YTD Net Profit Margin of approximately 11.3%, which is a significant jump, driven by a 73% increase in net income compared to the prior year. The business is scaling efficiently.

• Net Profit Margin (YTD Q3 2025): ~11.3%
• Operating Profit Margin (YTD Q3 2025): ~10.1%
• Full-Year 2025 Net Income Guidance: $124 million to $129 million

Margin Expansion and Cost Management

The real story here is operational efficiency, which is what drives long-term value. For an insurance-centric business like Hagerty, Inc., we look closely at the combined ratio (loss ratio plus expense ratio) instead of a traditional gross profit margin. The company's combined ratio-a key measure of underwriting profitability-remained under 90%, consistent with its decade-long average, which is a strong indicator of disciplined underwriting.

The operational efficiency is clear in the margin trends. Year-to-date through Q3 2025, operating margins improved by approximately 350 basis points, which is a substantial gain. This improvement is a direct result of effective cost management and the scaling of the business, even while investing $20 million of elevated spend in 2025, primarily for their new technology platform, Duck Creek. That's a smart trade-off: invest for future efficiency, but still deliver margin today.

Profitability vs. The Industry

Hagerty, Inc.'s niche focus on specialty vehicles gives it a distinct advantage over broader property and casualty (P&C) insurers. Here's the quick math on why that matters:

A lower combined ratio means more money is left over after paying claims and operating expenses-anything under 100% indicates an underwriting profit. Hagerty, Inc.'s combined ratio of 89% YTD Q3 2025 compares very favorably to the estimated U.S. P&C industry's combined ratio of 96.4% for the first half of 2025. This outperformance is a testament to the low-loss nature of the classic car market and the company's strong customer retention rate of 89%.

The company's loss ratio of 42.1% is a powerful differentiator, highlighting the advantage of its specialty focus when major insurers like Travelers and AIG reported combined ratios of around 92% and 86.8%, respectively, in recent quarters, which are still higher than Hagerty's underwriting performance. For a deeper look at the long-term vision driving these numbers, you should check out the Mission Statement, Vision, & Core Values of Hagerty, Inc. (HGTY).

Debt vs. Equity Structure

You want to know if Hagerty, Inc. (HGTY) is fueling its growth with too much debt, and the short answer is no. The company's balance sheet for the 2025 fiscal year shows a conservative approach to leverage, favoring equity over borrowing. This is a sign of financial stability in the specialty insurance space.

Here's the quick math: Hagerty, Inc. (HGTY) holds total debt of approximately $177.5 million against a total shareholder equity of $714.8 million, based on recent 2025 figures. This low reliance on debt is a deliberate, long-term strategy, and it's defintely something I look for in a growing company.

Debt-to-Equity: Low Leverage, High Flexibility

The core measure of this balance is the Debt-to-Equity (D/E) ratio, which tells you how much debt a company uses to finance its assets relative to the value of its shareholders' equity. For Hagerty, Inc. (HGTY), the calculated D/E ratio is around 24.8% (or 0.248). This is a strong, low-leverage position.

To put that in perspective, the industry average for Insurance - Specialty companies in the US as of November 2025 sits at about 0.27, or 27%. Hagerty, Inc. (HGTY) is operating with slightly less leverage than its peers. The company has also been actively reducing its reliance on debt, with the D/E ratio having decreased from 50.9% over the last five years. This trend shows a clear commitment to a robust, equity-backed financial foundation.

• Total Debt (2025): $177.5 million
• Total Equity (2025): $714.8 million
• D/E Ratio (2025): 24.8%
• Specialty Insurance Industry Average D/E: 27.0%

Financing Strategy: Equity-Driven Growth

Hagerty, Inc. (HGTY)'s recent capital activity confirms their preference for equity funding to support their growth initiatives, especially in technology. In August 2025, the company completed a Follow-on Equity Offering, raising $90.598 million. This infusion of capital is being directed toward elevated investment in their technology platforms, which should drive future efficiency and accelerated growth.

On the debt side, the company manages its obligations carefully. A notable near-term item is an interest rate swap with an original notional amount of $35.0 million, which is set to mature in December 2025. This type of instrument is used to manage interest rate risk on their borrowings. The company's debt is well-covered by its operating cash flow, plus they have more cash and short-term investments (around $290.5 million) than their total debt. That's a very comfortable buffer.

The table below summarizes the company's capital structure compared to the industry benchmark, showing a clear advantage in financial flexibility. For a deeper dive into who is buying this stock and why they believe in this strategy, you should check out Exploring Hagerty, Inc. (HGTY) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if Hagerty, Inc. (HGTY) can cover its near-term bills, and the answer is a qualified 'yes.' Their liquidity position, while tight based on standard metrics, is supported by strong cash generation from their core operations, a key sign of financial health that often gets missed when you only look at the balance sheet.

For the trailing twelve months (T12M) ending Q3 2025, Hagerty, Inc.'s Current Ratio sits right at 1.00. This means their current assets-cash, receivables, etc.-are just enough to cover their current liabilities, like accounts payable and short-term debt. That's a break-even point. More telling is the Quick Ratio (or acid-test ratio), which strips out less-liquid assets like inventory. That figure is 0.54. Here's the quick math: a ratio below 1.0 suggests a reliance on selling inventory or collecting receivables to pay immediate debts. For an insurance-focused business, this isn't a red flag like it would be for a retailer, but it defintely warrants a closer look.

• Current Ratio: 1.00 (Assets equal liabilities).
• Quick Ratio: 0.54 (Less than 1.0, signaling reliance on non-cash assets).

The working capital trend, which is the difference between current assets and current liabilities, is being managed tightly. A current ratio of 1.00 means working capital is essentially zero on a T12M basis. However, their cash position is solid; the company ended Q3 2025 with $160.4 million in unrestricted cash, which provides a strong buffer. This cash balance, plus a low total debt of $178 million, shows a conservative capital structure despite the tight working capital.

Looking at the cash flow statements gives a much clearer picture of Hagerty, Inc.'s operational strength, which is the ultimate source of liquidity. For the T12M period ending Q3 2025, Hagerty, Inc. generated a substantial $177.27 million in cash flow from operating activities. This is powerful. A company that consistently pulls in significant operating cash flow can easily manage a lower current ratio because the cash is constantly replenishing. What this estimate hides, though, is the quarterly volatility. Operating cash flow for Q3 2025 was a strong $65.0 million, but Q2 2025 was actually negative at -$59.4 million. This quarterly swing is common in the insurance sector due to the timing of premium collections and claims payments, but it demands careful monitoring.

The investing and financing activities also show clear trends. In Q3 2025, cash flow from investing activities was -$84.0 million, driven by purchases and sales of investments, which is typical for an insurance entity managing its float. The financing cash flow was a negligible inflow of $931K in Q3 2025. This profile suggests the company is funding its investment activities and growth primarily through its own operations, not relying heavily on new debt or equity issuance, which is a sign of self-sufficiency.

Here is a snapshot of the Q3 2025 cash flow components (in millions):

The potential liquidity concern is the low quick ratio, but the strength is the recurring, high-margin revenue from insurance and membership, which is why the T12M operating cash flow is so high. The company's focus on its core mission is key to this performance; you can read more about that here: Mission Statement, Vision, & Core Values of Hagerty, Inc. (HGTY). The strong year-to-date net income growth of 73% to $120.7 million through Q3 2025 reinforces that the underlying business is highly profitable and generating the capital needed to maintain liquidity.

Valuation Analysis

You're looking for a clear signal on Hagerty, Inc. (HGTY) and its valuation. The quick takeaway is that, based on near-term earnings expectations, the stock appears fully valued, leaning toward overvalued when compared to the broader insurance sector. The market is pricing in significant growth, not current performance.

When we look at the core valuation multiples-the Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA)-Hagerty, Inc. (HGTY) is trading at a premium. Here's the quick math using the latest available figures from the 2025 fiscal year data:

• Price-to-Earnings (P/E): The trailing P/E ratio sits at about 36.97. This is high for an insurance company, which often trades in the low to mid-teens, suggesting investors are willing to pay nearly 37 times earnings for a piece of the business.
• Price-to-Book (P/B): The P/B ratio is around 6.30. This is a substantial premium over the book value (the company's net assets), indicating the market values its brand, membership model, and growth potential far more than its physical assets.
• Enterprise Value-to-EBITDA (EV/EBITDA): The EV/EBITDA stands at approximately 29.84. This multiple, which accounts for debt, also signals a high growth expectation, as a ratio near 10x is often considered fair value for mature businesses.

The market is defintely betting on their unique niche in collector car insurance and the Hagerty Drivers Club ecosystem to deliver outsized future earnings.

Looking at the stock price trends, Hagerty, Inc. (HGTY) has shown solid upward momentum over the last 12 months, trading near the top of its range. The stock price as of late November 2025 is around $13.33 a share. This is a strong recovery from the 52-week low of $8.03, but it remains just shy of the 52-week high of $13.86. The stock is consolidating at a higher level, which suggests the recent positive earnings reports-like the Q3 2025 beat-are already baked into the price.

On the dividend front, this isn't a stock for income investors. Hagerty, Inc. (HGTY) does not currently pay a dividend. The dividend yield is 0.00%, and the payout ratio is non-applicable. The company is prioritizing reinvesting all earnings back into the business to fuel that high-growth strategy, which makes sense for a business focused on expanding its membership and services platform.

Wall Street analysts have a mixed, but cautious, view. The consensus rating for Hagerty, Inc. (HGTY) is a Hold. This means analysts believe the stock will perform in line with the broader market, not dramatically outperform or underperform from this point. The average 12-month price target is approximately $13.83, which offers a minimal upside from the current trading price.

Here's the breakdown of analyst sentiment from the firms covering the stock:

The clear action here is to understand the risk: you are paying a growth multiple for a business that needs to prove it can scale its profitability to justify the high P/E. Your next step should be to dig into their membership growth and retention metrics, which are the true drivers of this valuation premium. You can start by Exploring Hagerty, Inc. (HGTY) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking at Hagerty, Inc. (HGTY) because the growth story is strong-full-year 2025 Net Income is forecasted to land between $124 million and $129 million, a massive jump of up to 65% over the prior year. That's a fantastic number, but as a seasoned analyst, I have to map the near-term risks that could trip up that momentum. Every high-growth story has pressure points; Hagerty's are largely tied to technology, weather, and a big strategic shift.

The core external risks for Hagerty, Inc. are not unique, but they hit the insurance business hard. You have to consider the cyclical nature of the insurance market, which includes managing through periods of recession or high inflation that can depress discretionary spending on collectibles. Plus, there's the simple, unavoidable external risk of Mother Nature.

• Catastrophe & Claims Severity: Unexpected increases in claim frequency or severity can materially impact profitability. For example, the Southern California wildfires in Q1 2025 were estimated to have an $11 million pre-tax impact, which is a clear reminder of this exposure.
• Market Competition: While Hagerty has a strong enthusiast niche, they must continually compete effectively to attract and retain policyholders and Hagerty Drivers Club (HDC) members. Retention is key, and it defintely keeps the pressure on pricing and service.
• Regulatory Changes: Compliance with state, federal, and foreign laws relating to insurance is a constant operational burden, especially as they expand their marketplace business internationally.

What keeps me up at night for Hagerty, Inc. is the operational and strategic risk tied to their future structure and technology. The company is making a huge bet on its internal systems and its ability to absorb more risk.

Here's the quick math on the operational investment: Hagerty is spending an elevated $20 million in 2025, primarily on the new Duck Creek technology platform. This is a crucial, high-stakes project. If onboarding or implementation has major disruptions or outages, it directly threatens the customer experience and could slow new business acquisition. You can read more about how this impacts the investor profile in Exploring Hagerty, Inc. (HGTY) Investor Profile: Who's Buying and Why?

The biggest strategic pivot, and thus a major risk factor, is the planned transition to a new fronting arrangement with Markel, starting in 2026. This move means Hagerty will assume 100% of the underwriting risk and premium, up from the current 80% risk retention. While this is designed to capture more long-term profitability and operational control, it also means the company's balance sheet will be fully exposed to the insurance risk, requiring careful capital management and adherence to new accounting standards like 'Article 7' insurance financial disclosures.

The company is mitigating these risks by using its strong brand to drive retention (currently around 89%) and by investing heavily in technology to gain efficiency. They are also diversifying their offerings, like the new Enthusiast Plus program, and leveraging strategic partnerships, such as the one announced with Liberty Mutual and Safeco, to expand their reach without taking on all the distribution risk themselves.

The bottom line is that while Hagerty, Inc. is growing fast-Total Revenue is projected to be between $1.368 billion and $1.380 billion for 2025-that growth is underpinned by significant, necessary operational and strategic changes that introduce execution risk. Investors need to monitor the progress of the Duck Creek rollout and the capital implications of the 2026 risk retention shift.

Growth Opportunities

You're looking at Hagerty, Inc. (HGTY)'s growth prospects, and the direct takeaway is that their niche strategy is paying off with significantly accelerated profit projections for 2025. The company's focus on its enthusiast ecosystem-insurance, membership, and marketplace-is driving margin expansion faster than expected, which is a great sign.

Honestly, the numbers speak for themselves. Following strong performance through the third quarter of 2025, Hagerty, Inc. raised its full-year outlook for the second time. Year-to-date through Q3 2025, Total Revenue hit over $1.068 billion, an 18% year-over-year increase, with Net Income soaring by 73% to $120.7 million. That margin expansion is defintely a key factor.

Here's the quick math on the full-year projections, which reflect the company's increasing confidence in its ability to scale its specialty model:

What this estimate hides is the strategic foundation enabling this growth. It's not just about selling more policies; it's about making the entire operation more efficient and expanding the addressable market through key initiatives.

Strategic Initiatives and Market Expansion

The near-term growth is anchored in three clear, actionable areas: technology, partnerships, and its high-margin Marketplace segment. Hagerty, Inc. is making a substantial, elevated investment of $20 million in 2025 into its new technology platform, Duck Creek, which is designed to streamline underwriting and claims processing. This is a crucial move to support their long-term goal of doubling their policy count to 3 million by 2030.

Plus, strategic partnerships are opening up massive new distribution channels. The State Farm Classic Plus program is rolling out to over 25 states in 2025, essentially piggybacking on the distribution network of one of the largest insurers in the U.S. Just recently, in November 2025, they announced a new partnership with Liberty Mutual Insurance, the seventh largest auto insurer in the United States, to offer enhanced collectible car insurance to Liberty Mutual and Safeco customers starting in 2026. That's a huge boost in reach.

Product innovation is also driving growth, with the launch of Enthusiast+ on the Duck Creek platform in July 2025. Meanwhile, the Marketplace segment, which includes auctions and vehicle protection services, is showing explosive growth, with year-to-date revenue up 135% to $89.9 million through Q3 2025. This is a high-margin business that directly benefits from the brand's enthusiast community.

Competitive Moat and Future Profitability

Hagerty, Inc.'s competitive advantage (or moat) is its specialized underwriting expertise in the collector vehicle space. This is a very different risk profile than standard auto insurance. Their year-to-date Q3 2025 loss ratio of 42.1% is a testament to this, standing significantly lower than the broader auto insurance industry average, which is closer to 68%. This superior underwriting profitability is the engine of the business.

The brand loyalty is also a powerful retention tool. They maintain a high policy retention rate of 88.6%, and the Hagerty Drivers Club has nearly 900,000 paid members. This community-first approach creates a recurring revenue stream and a low-cost customer acquisition channel. To understand the core values driving this loyalty, you should read Mission Statement, Vision, & Core Values of Hagerty, Inc. (HGTY).

Looking ahead to 2026, the company's planned evolution of its fronting arrangement with Markel is a game-changer for profitability. The non-binding Letter of Intent (LOI) means Hagerty, Inc. will control 100% of the premium and retain 100% of the underwriting and investment economics starting January 1, 2026. Given the historical underwriting profits, this move will directly boost the bottom line by eliminating third-party fees and giving them full operational control over their most profitable business line.

• Invest in the Duck Creek technology platform with $20 million in 2025.
• Expand insurance distribution via State Farm Classic Plus and the new Liberty Mutual partnership.
• Capture high-margin revenue from the Marketplace, which grew 135% YTD 2025.
• Prepare for higher 2026 profitability by controlling 100% of the premium from the Markel arrangement.

Finance: Track the Net Income growth against the 58-65% guidance to confirm margin expansion is on target.